Air Canada says soaring fuel costs are forcing the company to cut at least 2,000 jobs and reduce its capacity, and more jobs could be lost if prices keep rising.
"There are no assurances at all that this is the end (of job cuts)," Lesley Swan, president of the Air Canada component of CUPE, told CTV's Mike Duffy Live on Tuesday.
"On the contrary, they indicated this might just be the beginning."
Her union represents roughly 25 per cent of the employees who will be out of work.
"They are very, very upset. Devastated. This will impact our junior members who are just starting their careers," she said. "They're at the bottom of the wage scale and they're the ones with the mortgages."
The cuts stem from a seven per cent reduction in capacity in the airline's fall and winter schedule, which means less staff will be needed.
On its website, the Montreal-based company claims to have the equivalent of 23,900 full-time employees, with an average of 1,370 scheduled flights per day in 2007. Cutting 2,000 jobs equates to about an eight per cent cut.
"The loss of jobs is painful in view of our employees' hard work in bringing the airline back to profitability over the past four years,'' president and CEO Montie Brewer said in a statement issued Tuesday.
"I regret having to take these actions but they are necessary to remain competitive going forward. Air Canada, like most global airlines, needs to adapt its business and reduce flying that has become unprofitable in the current fuel environment," he said.
Air Canada spokesperson Isabel Vincent told The Canadian Press that if fuel costs continue to rise, more jobs could be lost.
"It's never exciting to hear your industry is under siege," Air Canada pilot Will Failing told CTV Montreal after the announcement, but he noted the company has been through it before.
Air Canada is joining a grim trend. Four U.S.-based carriers have announced the elimination of 10,000 jobs since May 30.
However, rival WestJet said it no plans to follow suit.
"It's business as usual," spokesperson Richard Bartrem told Mike Duffy Live. "We have no plans for any layoffs, no plans for any capacity cutbacks.
"In fact, quite the opposite - we will continue to take on aircraft this year through to the end of our current strategic plan in 2013."
Soaring price of oil
Oil has been selling for more than $130 per barrel in recent days.
Fuel accounts for more than 30 per cent of Air Canada's operating costs. The company said that the rapid rise in fuel costs could mean it will face a bill that's $1 billion higher than in 2008 than it was in 2007.
The capacity reduction, which will total seven per cent, will begin in October. The reductions will allocated as follows:
- Domestic: Two per cent
- U.S. transborder: 13 per cent
- International: Seven per cent
Air Canada has previously announced the suspension of its Toronto-Rome flight. However, it will remain over the summer.
Canada's largest airline has also previously announced the suspension of its Vancouver-Osaka, Japan flight, which will stop on Oct. 26.
An Air Canada spokesperson told CTV.ca that the details of the cuts haven't been determined yet.
The reductions mean Air Canada has reduced its capacity growth outlook.
It had previously forecast growth of up to 2.5 per cent above 2007 levels. That has now been cut to anywhere from minus one per cent to plus one per cent.
Strategy questioned
A University of Toronto business professor and airlines industry analyst questioned Air Canada's strategy, saying it could hurt the airline rather than help.
"I'm really concerned Air Canada is going to get itself into a vicious cycle," Joseph D'Cruz of the Rotman School of Management told 麻豆影视net on Tuesday.
"As morale goes down, the treatment that frontline employees offer to passengers is bound to suffer. In the airline business, everything depends on how the frontline employees behave," he said.
One beneficiary could be WestJet, which could see its market share rise, he said -- something that could force further cutbacks in staff and flights at Air Canada.
D'Cruz said the airline showed little concern about the welfare of their employees in its announcement.
But Paul Dempsey, an aviation law expert at Montreal's McGill University, said Air Canada had no choice but to cut costs.
Business travellers still have to fly, but Dempsey predicted the rising cost of air travel will keep holiday travellers grounded.
With files from The Canadian Press
